A.M. Best Affirms Ratings of Electro Re S.A.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of B++ (Very Good) and the issuer credit rating of "bbb+" of Electro E`lec´tro n. 1. An electrotype. Re S.A. (Luxembourg), the reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. subsidiary of Alcatel (France). The outlook on both ratings remains stable. The rating action reflects Electro Re's strong risk-adjusted capitalisation and improved underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. performance. An offsetting factor is Electro Re's aggressive investment strategy, which could lead to potential volatility in the company's investment performance. In A.M. Best's opinion, Electro Re's prospective risk-adjusted capitalisation is likely to remain strong during the next two years, supported by the continuation of the retention of profits in the form of equalisation Noun 1. equalisation - the act of making equal or uniform equalization, leveling human action, human activity, act, deed - something that people do or cause to happen reserves, a comprehensive three-year retrocession RETROCESSION, civil law. When the assignee of heritable rights conveys his rights back to the cedent, it is called a retrocession. Erskine, Prin. B. 3, t. 5, n. 1; Dict. do Jur. h.t. programme and stabilisation in net written premiums at approximately at their current level. A.M. Best believes that the company's combined ratio is likely to be good and expects it to stabilise at approximately 80% in 2006 and 2007, consistent with the 79.6% in 2005. The low combined ratio is due to Alcatel's divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of loss-prone businesses in recent years and the rise in deductibles in the original policies, which together improved Electro Re's claims frequency. A.M. Best forecasts that during 2006 and 2007, the investment return, including realised gains and losses but excluding unrealised capital gains, is likely to remain modest, in line with the low 2.2% level in 2005 due to significant unrealised gains. A.M. Best believes that Electro Re's investment strategy increases the potential volatility of its investment performance as a high proportion of the investment portfolio comprises equities (27%), although capital gains could be realised to smooth the overall operating performance in the event of investment volatility. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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